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Asian equities were vulnerable to losses amid the cautious trading sentiment, with negative momentum already limiting gains in European markets. With Donald Trumpâ€™s recent warning of a â€śmajor, major conflictâ€ť with North Korea adding to jitters this week, the upside on Wall Street may face headwinds this afternoon as participants start to scatter from riskier assets back to safety. With uncertainty still a dominant market theme and questions already being raised over Trumpâ€™s ability to move forward with his proposed tax reforms, further upheaval could expose stock markets to downside shocks.

UK GDP disappoints on Q1 2017

Sterling/Dollar was volatile on Friday, following the release of a disappointing first quarter 2017 UK GDP figure of 0.3%, reviving concerns that the UK is struggling to recover from its Brexit hangover. Sterlingâ€™s Brexit-induced weakness has negatively impacted one of the major drivers behind the UKâ€™s economic growth as rising inflation pressures consumers. The threat of rising inflation impacting consumer spending could spark speculation that economic growth will decelerate in the future. With todayâ€™s soft economic release adding to the Brexit woes, sentiment towards the vulnerable Sterling could take another hit. From a technical standpoint, the GBPUSD has broken above the 1.2875 with the next level of interest at 1.3000. In an alternative scenario, weakness below 1.2775 may open a path back towards 1.2600.

Mario Draghi strikes again

The Euro bears were unleashed on Thursday, after Mario Draghi swiftly quelled heated taper tantrum expectations with his dovish rhetoric. Although the European Central Bank displayed a touch of optimism when discussing the Eurozoneâ€™s economic recovery, its monetary stance remained somewhat dovish. While the Eurozone recovery has become increasingly solid and downside risks have diminished, some external, global risks and uncertainty that may force the ECB to remain on the defense still remain.

The next event risk which may spark extreme levels of volatility on the Euro will be the second round of the French presidential elections on 7 May. Although a victory by Emmanuel Macron may seal the deal for the Euro bulls with the EURUSD lurching towards 1.100, parity on the EURUSD still remains a possibility in the event of an unexpected victory by Marine Le Pen.

Gold balances on thin ice

The growing appetite for risk has exposed Gold to downside losses, with prices hovering around $1260 as of writing. Bears benefitted from the risk-on trading environment this week and have ensured the yellow metal remains depressed below $1280. Although ongoing geopolitical tensions across the globe and Trump uncertainties may support Gold in the longer term, there is still a live possibility of short term bears conquering the $1260 level.

Much attention will be directed towards the Q1 2017 US GDP report published later on today, which could impact where Gold concludes this month. A soft US GDP figure will have the ability to weaken the Dollar and trim rate hike expectations, ultimately supporting the yellow metal. From a technical standpoint, a breakdown and daily close below $1260 should encourage a further decline towards $1240. In an alternative scenario, bulls need to keep above $1260 for a further incline back towards $1280.